According to the government, the Spitzers' son is just a "nominee," a person who "holds bare legal title for the benefit of others." United States v. Szaflarski, 614 F. App'x 836, 838 (7th Cir. 2015). A mere nominee's third-party interest in a property cannot render a forfeiture invalid.
Jorgovanka disputes this conclusion and asserts that despite the uncontested evidence that Jelena wired $773,250 to Pharmix, equitable ownership of PHMX belongs to her or to Zaric. To decide whether Jorgovanka was a nominee for Jelena, the bankruptcy court applied a five-factor test for nomineeship from an unpublished Seventh Circuit opinion, United States v. Szaflarski, 614 F. App'x 836, 838-39 (7th Cir. 2015): "(1) there is a close personal relationship between the nominee and the transferor; (2) the nominee paid little or no consideration for the property; (3) the parties placed the property in the name of the nominee in anticipation of collection activity; (4) the parties did not record the conveyance; and, (5) the transferor continues to exercise dominion and control over the property." These factors generally accord with other federal caselaw.
Jorgovanka disputes this conclusion and asserts that despite the uncontested evidence that Jelena wired $773,250 to Pharmix, equitable ownership of PHMX belongs to her or to Zaric. To decide whether Jorgovanka was a nominee for Jelena, the bankruptcy court applied a five-factor test for nomineeship from an unpublished Seventh Circuit opinion, United States v. Szaflarski, 614 Fed.Appx. 836, 838-39 (7th Cir. 2015): "(1) there is a close personal relationship between the nominee and the transferor; (2) the nominee paid little or no consideration for the property; (3) the parties placed the property in the name of the nominee in anticipation of collection activity; (4) the parties did not record the conveyance; and, (5) the transferor continues to exercise dominion and control over the property." These factors generally accord with other federal caselaw.
Because "Illinois courts have never articulated a detailed standard for what constitutes a nominee," federal courts apply federal law in the analysis. United States v. Szaflarski , 614 Fed. App'x. 836, 838 (7th Cir. 2015) (non-precedential disposition). Typically, courts "consider several factors in determining whether a titleholder is actually serving as a nominee for the benefit of another."
Illinois law determines whether an adverse claimant has a legally cognizable interest in the property. United States v. Szaflarski, 614 F. App'x 836, 838 (7th Cir. 2015). In Illinois, real estate held through a tenancy by the entirety protects a spouse against having his or her homestead property sold to satisfy the individual debts of the other spouse, unless the property was transferred into tenancy by the entirety with the sole intent to avoid the payment of debts existing at the time of the transfer.
For an illustrative decision authorizing the setting aside of an Illinois land trust, SeeUnited States v. Szaflarski , 614 F. App'x 836 (7th Cir. 2015). The facts in Szaflarski are strikingly like Trustee's allegations.
In applying federal law to this issue, the Seventh Circuit has explained that "[c]ourts consider several factors in determining whether a titleholder is actually serving as a nominee for the benefit of another, including whether: (1) there is a close personal relationship between the nominee and the transferor; (2) the nominee paid little or no consideration for the property; (3) the parties placed the property in the name of the nominee in anticipation of collection activity; (4) the parties did not record the conveyance; and, (5) the transferor continues to exercise dominion and control over the property." United States v. Szaflarski , 614 F. App'x 836, 838-39 (7th Cir. 2015) (citing Oxford Capital Corp. v. United States , 211 F.3d 280, 284 n. 1 (5th Cir. 2000) ). The fourth factor is not relevant to this dispute.
In applying federal law to this issue, the Seventh Circuit has explained that "[c]ourts consider several factors in determining whether a titleholder is actually serving as a nominee for the benefit of another, including whether: (1) there is a close personal relationship between the nominee and the transferor; (2) the nominee paid little or no consideration for the property; (3) the parties placed the property in the name of the nominee in anticipation of collection activity; (4) the parties did not record the conveyance; and, (5) the transferor continues to exercise dominion and control over the property." United States v. Szaflarski, 614 Fed.Appx. 836, 838-39 (7th Cir. 2015) (citing Oxford Capital Corp. v. United States, 211 F.3d 280, 284 n. 1 (5th Cir. 2000)). The fourth factor is not relevant to this dispute.
Those factors include whether: “(1) there is a close personal relationship between the nominee and the transferor; (2) the nominee paid little or no consideration for the property; (3) the parties placed the property in the name of the nominee in anticipation of collection activity; (4) the parties did not record the conveyance; and, (5) the transferor continues to exercise dominion and control over the property.” See United States v. Szaflarski, 614 Fed.Appx. 836, 838 (7th Cir. 2015). In the specific context of trusts, courts also look to the identity of the sole beneficiary.
Because "Illinois courts have never articulated a detailed standard for what constitutes a nominee," federal courts apply federal law in the analysis. United States v. Szaflarski, 614 Fed. App'x. 836, 838 (7th Cir. 2015) (non-precedential disposition). Courts "consider several factors in determining whether a titleholder is actually serving as a nominee for the benefit of another."